Beasley Broadcast(BBGI) - 2019 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and related notes, along with management's discussion and analysis of financial condition and results of operations Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Comprehensive Income, and Statements of Cash Flows, for Beasley Broadcast Group, Inc Condensed Consolidated Balance Sheets (Unaudited) | Account | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $723,895,925 | $681,085,079 | | Total Current Assets | $69,706,067 | $70,945,768 | | FCC broadcasting licenses | $516,735,554 | $516,735,554 | | Goodwill | $25,377,447 | $25,377,447 | | Total Liabilities | $444,678,579 | $406,050,988 | | Total Current Liabilities | $36,596,373 | $28,859,360 | | Long-term debt, net | $237,244,486 | $242,776,520 | | Total Stockholders' Equity | $279,217,346 | $275,034,091 | Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net revenue | $65,658,748 | $61,625,296 | | Operating income | $10,677,644 | $10,655,652 | | Net income | $4,269,001 | $4,918,612 | | Basic and diluted EPS | $0.15 | $0.18 | | Dividends declared per share | $0.05 | $0.05 | | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | Net revenue | $123,346,302 | $116,778,923 | | Operating income | $17,487,222 | $11,051,300 | | Net income | $5,622,264 | $1,757,420 | | Basic and diluted EPS | $0.20 | $0.06 | Condensed Consolidated Statements of Cash Flows (Unaudited, Six Months Ended June 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,533,939 | $10,982,567 | | Net cash used in investing activities | ($3,369,405) | ($2,329,499) | | Net cash used in financing activities | ($9,325,978) | ($7,753,709) | | Net (decrease) increase in cash | ($1,161,444) | $899,359 | | Cash and cash equivalents at end of period | $12,272,384 | $14,821,749 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations for financial statement figures, covering lease accounting, acquisitions, debt, revenue recognition, and stock-based compensation Recent Accounting Pronouncements The company adopted new FASB lease accounting guidance on January 1, 2019, recognizing significant lease liabilities and right-of-use assets - On January 1, 2019, the Company adopted the new lease guidance, recording a lease liability of $43.1 million and right-of-use assets of $38.8 million, with a cumulative effect adjustment of $0.9 million to retained earnings[10] Acquisitions and Dispositions The company agreed to acquire WDMK-FM for $13.5 million and completed two dispositions in Q1 2019, generating a $3.5 million gain - On June 10, 2019, the Company agreed to acquire WDMK-FM and three translators in Detroit from Urban One, Inc. for $13.5 million in cash, with the deal expected to close in Q3 2019[11] - In Q1 2019, the company generated a total gain of $3.5 million from two dispositions: the sale of land in Augusta, GA ($0.4 million gain) and the cancellation of a broadband radio service license in Chattanooga, TN ($3.1 million gain)[12][13] Other Assets The company invested $4.5 million in esports organization Renegades Holdings, Inc., acquiring an approximate 43% stake through cash, stock, and media advertising - The company invested $4.5 million in esports organization Renegades Holdings, Inc. for an approximate 43% stake The investment consisted of $2.5 million in cash, $1.0 million in Class A common stock, and $1.0 million in media advertising[17] Long-Term Debt As of June 30, 2019, long-term debt primarily consisted of a $245.5 million term loan, with the company in compliance with all financial covenants and full availability of its $20.0 million revolving credit facility Long-Term Debt Composition (June 30, 2019) | Component | Amount | | :--- | :--- | | Term loan | $245,500,000 | | Revolving credit facility | $0 | | Less unamortized debt issuance costs | ($8,255,514) | | Total Long-Term Debt, Net | $237,244,486 | - The term loan matures on November 1, 2023, and carried an interest rate of 6.4% as of June 30, 2019 The company was in compliance with its financial covenants, including a maximum First Lien Leverage Ratio of 5.75x[18][21][23] Revenue The company's revenue, primarily from commercial advertising, grew to $123.3 million for the six months ended June 30, 2019, driven by increases in both commercial and digital advertising Revenue by Type (Six Months Ended June 30) | Revenue Type | 2019 | 2018 | | :--- | :--- | :--- | | Commercial advertising | $106,957,086 | $101,116,875 | | Digital advertising | $8,455,130 | $7,330,337 | | Other | $7,934,086 | $8,331,711 | | Total Revenue | $123,346,302 | $116,778,923 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for the three and six months ended June 30, 2019, highlighting revenue growth, net income changes, and liquidity - The company operates 64 radio stations across various markets, including Atlanta, Boston, Detroit, Philadelphia, and Tampa[48] - Net revenue is primarily derived from the sale of commercial spots, with rates based on audience share (Nielsen Audio ratings), competition, and market size Revenue is typically lowest in the first quarter[55][56][57] Results of Operations (Three Months Ended June 30) Q2 2019 net revenue increased by 6.5% to $65.7 million due to acquisitions and market growth, though net income decreased by 13.2% to $4.3 million due to higher expenses Q2 2019 vs Q2 2018 Financial Comparison | Metric | Q2 2019 | Q2 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $65,658,748 | $61,625,296 | $4,033,452 | 6.5% | | Station operating expenses | $47,759,693 | $44,967,293 | $2,792,400 | 6.2% | | Net income | $4,269,001 | $4,918,612 | ($649,611) | (13.2)% | - The $4.0 million revenue increase was primarily due to $3.2 million from the Philadelphia market (WXTU-FM acquisition) and a $1.6 million increase in the Boston market[64] - Corporate general and administrative expenses rose by $1.0 million, mainly due to a $0.7 million increase in cash compensation from a higher employee count at corporate offices[67] Results of Operations (Six Months Ended June 30) H1 2019 net revenue grew 5.6% to $123.3 million, with net income significantly increasing by 219.9% to $5.6 million, primarily due to disposition gains H1 2019 vs H1 2018 Financial Comparison | Metric | H1 2019 | H1 2018 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $123,346,302 | $116,778,923 | $6,567,379 | 5.6% | | Gain on dispositions | $3,545,755 | $0 | $3,545,755 | N/A | | Net income | $5,622,264 | $1,757,420 | $3,864,844 | 219.9% | - The $6.6 million revenue increase was driven by the Philadelphia ($5.4 million), Boston ($2.1 million), and Tampa-Saint Petersburg ($0.9 million) markets, partially offset by declines in Las Vegas and Charlotte[72] - A $3.5 million gain on dispositions was recorded in H1 2019 from the sale of land in Augusta and the cancellation of a license in Chattanooga[76] Liquidity and Capital Resources The company's liquidity relies on cash from operations and its $20.0 million revolving credit facility, with management confident in sufficient liquidity despite debt covenants and dividend restrictions - As of June 30, 2019, the company had a term loan balance of $245.5 million and $20.0 million available under its revolving credit facility[82] - The credit agreement restricts annual cash dividends to $7.5 million if the Total Leverage Ratio is above 3.5x, and $10.0 million if it is at or below 3.5x The company paid $2.8 million in dividends in H1 2019[88] Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,533,939 | $10,982,567 | | Net cash used in investing activities | ($3,369,405) | ($2,329,499) | | Net cash used in financing activities | ($9,325,978) | ($7,753,709) | Quantitative and Qualitative Disclosures About Market Risk This section is omitted as it is not required for smaller reporting companies - Disclosure is not required for smaller reporting companies[96] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective as of the end of the reporting period[97] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, internal controls[98] PART II OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity security sales, and exhibits Legal Proceedings The company is involved in incidental litigation, but management believes no current proceedings will materially adversely affect its financial condition or operations - The company is not a party to any lawsuit or proceeding that is likely to have a material adverse effect on its financial condition or operations[98] Risk Factors This section refers to risk factors from the 2018 Form 10-K, confirming no material changes during Q2 2019 - There have been no material changes to the risk factors affecting the Company during the second quarter of 2019 For details, refer to Item 1A of the 2018 Form 10-K[102] Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2019, the company repurchased Class A common shares to fund withholding taxes related to employee restricted stock vesting, as permitted by its equity plan and credit agreement Share Repurchases (Q2 2019) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 – 30, 2019 | 1,875 | $3.78 | | May 1 – 31, 2019 | 500 | $3.57 | | June 1 – 30, 2019 | 750 | $3.18 | - All share purchases were made to fund withholding taxes in connection with the vesting of restricted stock units and shares, not as part of a publicly announced program[100] Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - None[104] Mine Safety Disclosures This item is not applicable to the company - Not applicable[105] Other Information No information was provided under this item - None[105] Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Rule 13a-14(a)/15d-14(a) and Section 1350, as well as XBRL documents[107] Signatures This section contains the formal signatures authorizing the report Signatures The report was formally signed and authorized by Caroline Beasley, CEO, and Marie Tedesco, CFO, on August 7, 2019 - The report was signed on August 7, 2019, by Caroline Beasley (CEO) and Marie Tedesco (CFO)[108][109]